Recapping a couple macro themes from today that are part of larger macro views we have.

Janet_yellenThe Fed:

So what do I think of Yellen’s comments today? I think the Fed is now trying to moderate forward guidance at their next meeting and thus you now have even greater significance to the next NFP number (especially after the wage “heat” in the January Payroll number, the street around 240-255K on Feb NFP).

There was little new information in the statement from Yellen on timing of the first hike we have since 2006(Yes, people, almost a decade!). Yellen clearly focusing us away from lower oil prices and trouble global economies. Specific mention of EU and China. Her Q/A session brought about a little hawkish exchange with Senator Schumer and thus we do feel the Fed is trying to keep the market off the bubble bandwagon.

10yr Yields could not hold key 2.05% support today, which was the level we believed could hold and begin to challenge the recent upper end of the range (2.15%). Now we watch what may really be support in 1.96-1.98%. I think rates are going to bounce here rather than test back to 1.80s.

10yr

Meanwhile DXY congestion area at 95.00 may indeed be forming more of a top than we expected.  Not only will Fed minutes dictate the direction of the USD but also watch oil prices which we think have been dictating a bit of the Dollars move, i.e. tail wagging dog. 

 DXY

Commodities rallied small again today (+13bps) and despite the sideways action more or less on the CRB since early January, miners are more than sideways during this period.

com

Looking at the charts of a handful of core mining names from Jan through present you can see how these miners rally when the underlying stops going down.  In many cases we have also digested earnings and outlooks that were difficult, thus we would argue the “bars remain low” on expectations and on comps.

 Teck Resources (TCK)TCK

Rio TintoRIO

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